Possible Bearish Signals With Thungela Resources Insiders Disposing Stock

Quite a few Thungela Resources Limited (JSE:TGA) insiders sold their shares over the past year, which may be a cause for concern. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Thungela Resources

The CFO & Executive Director, Gideon Smith, made the biggest insider sale in the last 12 months. That single transaction was for R6.5m worth of shares at a price of R87.50 each. That means that even when the share price was below the current price of R105, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 31% of Gideon Smith's holding. Notably Gideon Smith was also the biggest buyer, having purchased R2.7m worth of shares.

Over the last year we saw more insider selling of Thungela Resources shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Thungela Resources

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Insiders At Thungela Resources Have Bought Stock Recently

It's good to see that Thungela Resources insiders have made notable investments in the company's shares. We can see that CFO & Executive Director Gideon Smith paid R2.7m for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. From our data, it seems that Thungela Resources insiders own 0.9% of the company, worth about R120m. We do generally prefer see higher levels of insider ownership.

So What Do The Thungela Resources Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. However, the longer term transactions are not so encouraging. The recent buying by an insider , along with high insider ownership, suggest that Thungela Resources insiders are fairly aligned, and optimistic. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Thungela Resources. Our analysis shows 2 warning signs for Thungela Resources (1 doesn't sit too well with us!) and we strongly recommend you look at them before investing.

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For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.